Vehicle Shuttling Northeast Region

Transcription

1 Audit Report Report Number DR-AR-6-4 May 4, 6 Vehicle Shuttling Northeast Region

2 Background Shuttling is the scheduled movement of vehicles from a Post Office to a vehicle maintenance facility (VMF) or commercial vendor for maintenance. VMF managers decide whether to use Postal Service employees or commercial vendors for shuttling services. Shuttling labor costs are tracked through the Solution for Enterprise Asset Management (SEAM) system. During fiscal years (FY) 4 and 5, the U.S. Postal Service spent almost $ million and $4 million, respectively, on vehicle shuttling labor. The Northeast Region, with 8 VMFs, had the highest costs nationwide in FYs 4 and 5, spending $8.6 million and over $ million, respectively. We judgmentally selected 5 of the 8 VMFs in the Northeast Region for review. Our objective was to determine whether the Postal Service was cost effectively shuttling postal-owned vehicles in the Northeast Region. What The OIG Found Northeast Region fleet management did not cost effectively shuttle postal-owned vehicles at the 5 VMFs we reviewed. Specifically, 7 of 5 VMF managers did not perform cost Report Number DR-AR-6-4 analyses to obtain the most cost-effective shuttling rates because there was no requirement to do so. Our analysis showed that VMF managers paid commercial vendors anywhere from $5 to $5 per hour, plus various mileage and hookup fees, for shuttling services. When cost analyses are not required, inconsistent fees could result in overpayments for services going unnoticed. Further, in FYs 4 and 5, commercial labor accounted for 87 and 8 percent, respectively, of total shuttling labor costs in the Northeast Region. In these years, VMFs used,676 commercial workhours for vehicle shuttling. Using internal resources to better manage commercial shuttling workhours would have saved the Postal Service about $. million in FY 4 and $.7 million in FY 5. In addition, employees at nine of the 5 VMFs did not reconcile commercial vendor shuttling invoices to the fiscal year budgeted amount in SEAM or to any documented shuttling service request. Managers at only two of these nine VMFs confirmed that shuttling services received matched their documented shuttling service requests. Two other VMFs did not use any commercial vendors for shuttling and, therefore, did not require reconciliations.

3 Finally, management understated shuttling costs because labor hours were not accurately put into SEAM for any of the 5 VMFs in FY 4 and for of the VMFs in FY 5. These conditions occurred because the Postal Service s Fleet Management Handbook lacks specific policies and procedures for managing and overseeing shuttling services, such as vendor selection. The handbook specifies which account codes should not be used for vehicle shuttling. In addition, the handbook only provides guidance on entering data and reconciling costs for commercial vendors with national or local vehicle maintenance repair agreements. Lack of standardized shuttling procedures for vendor selection, reconciliations, and shuttling rates and fees could result in the Postal Service not receiving the most cost-effective service and paying for questionable shuttling services. Report Number DR-AR-6-4 In addition, inaccurate reporting in SEAM gives limited assurance that managers can rely on shuttling cost data to make operational decisions. Reducing commercial labor workhours could save the Postal Service about $. million in FY 6 and $.7 million in FY 7. What The OIG Recommended We recommended the vice president, Delivery Operations, direct Northeast Region fleet management to reduce commercial shuttling costs by using additional internal resources for shuttling services where available and necessary, develop and implement policies and procedures for managing and overseeing shuttling services, and ensure shuttling costs are accurately recorded in SEAM.

4 Transmittal Letter May 4, 6 MEMORANDUM FOR: E-Signed by Michael Thompson VERIFY authenticity with esign Desktop FROM: Michael L. Thompson Deputy Assistant Inspector General for Mission Operations SUBJECT: Audit Report (Report Number DR-AR-6-4) This report presents the results of our audit of Vehicle Shuttling in the Northeast Region (Project Number 5XG45DR). We appreciate the cooperation and courtesies provided by your staff. If you have any questions or need additional information, please contact Rita F. Oliver, director, Delivery, or me at EDWARD F. PHELAN JR. VICE PRESIDENT, DELIVERY OPERATIONS Attachment cc: Corporate Audit and Response Management Report Number DR-AR-6-4

5 Cover... Background... What The OIG Found... What The OIG Recommends... Transmittal Letter Introduction...5 Summary...6 Vehicle Shuttling Rates and Fees...6 Reconciliations...9 Solution for Enterprise Asset Management Input...9 Other Matters... Corrective Action Taken Management s Comments... Evaluation of Management s Comments Appendix A: Additional Information...5 Background...5 Objective, Scope, and Methodology...5 Prior Audit Coverage...6 Appendix B: Shuttling/Towing Rates and Fees...7 Appendix C: Shuttling Labor Costs for 5 Vehicle Maintenance Facilities...8 Appendix D: Vehicle Maintenance Facility Staffing...9 Appendix E: Vehicle Maintenance Facility Vehicle Count... Appendix F: Flowchart of Vehicle Shuttling Process... Appendix G: Management s Comments... Contact Information...5 Report Number DR-AR-6-4 4

6 Shuttling is the scheduled movement of postal-owned vehicles from a Post Office to a vehicle maintenance facility (VMF) or commercial vendor Introduction This report presents the results of our self-initiated audit of vehicle shuttling in the Northeast Region (Project Number 5XG45DR). Our objective was to determine whether the U.S. Postal Service was cost effectively shuttling postal-owned vehicles in the Northeast Region. See Appendix A for additional information about this audit. Shuttling is the scheduled movement of postal-owned vehicles from a Post Office to a vehicle maintenance facility (VMF) or commercial vendor for maintenance or repair. VMF managers have the discretion to use Postal Service employees, vendors associated with the national Vehicle Maintenance Repair Agreement (VMRA), or local vendors for this service. The Postal Service tracks shuttling labor costs through the Solution for Enterprise Asset Management (SEAM) system. The Postal Service spent almost $ million in fiscal year (FY) 4 and $4 million in FY 5 for vehicle shuttling labor costs nationwide. The Northeast Region, with 8 VMFs, had the highest costs in FYs 4 and 5; spending $8.6 million and over $ million, respectively (see Table ). We judgmentally selected 5 of the 8 VMFs in the Northeast Region for review. Table. FY 4 and FY 5 National Vehicle Shuttling Labor Costs $,, for maintenance or repair. FY 4 VMF Labor Commercial Labor Total Labor VMF Labor Commercial Labor Total Labor $,79,65 $,7,567 $,87, $,548,7 $,955,47 $6,54, Eastern $6,, 89,56,,,9,774,585,9,8,,865,49 Great Lakes 86,6,9,7,75,4,847,79,649,96 4,496,85 Northeast,6,79 $,, Pacific 466,946 7,454,7 8,64,45,98,95 9,494,6,4,96,4,688,867,64 744,79,6,4,65,85 Southern 6,9, 7,68,76,8,475 6,965,75 9,45,75 Region $ 9,, Capital Metro FY 5 Western FY 4 FY 5 Total,9,78 VMF Labor 77,657 $ 7,7,686 $7,7,686 $,667,887,94,89 $4,58,7 Commercial Labor,6,486 $ 4,58,7 $,69,756 $9,8,98,6, $,667,887 Total Labor,749,56,7,57 Click on either $,69,756 year for more $9,8,98 $4,75,85 $ 4,75,85 information Source: SEAM Vehicle Maintenance Cost Report in Dollars. Report Number DR-AR-6-4 In May 5, the VMFs were realigned under Postal Service Headquarters and the fleet management restructuring created seven regions that do not conform to existing Postal Service area and district lines. VMF locations excluded were Lynn, Boston, Chelsea auxiliary assistance (AUX), Manchester, Providence, Springfield, Pittsfield AUX, Staten Island, Brooklyn, Queens, Hicksville, New York (Manhattan), and New York (FDR). The Postal Service converted to SEAM in 4; therefore, shuttling costs were only available for FYs 4 and 5. 5

7 Summary Northeast Region fleet management did not cost effectively shuttle postal-owned vehicles at the 5 VMFs we reviewed. Specifically, 7 of 5 VMF managers did not perform cost analyses to obtain the most cost-effective shuttling rates because there was no requirement to do so. Northeast Region fleet management did not cost effectively shuttle postal-owned vehicles at the 5 VMFs we reviewed. Our analysis showed that VMF managers paid commercial vendors anywhere from $5 to $5 per hour, plus various mileage and hookup fees, for shuttling services. When cost analyses are not required, inconsistent fees could result in overpayments for services going unnoticed. Further, in FYs 4 and 5, commercial labor accounted for 87 and 8 percent, respectively, of total shuttling labor costs in the Northeast Region. In these years, VMFs used,676 commercial workhours for vehicle shuttling. Using internal resources to better manage commercial shuttling workhours would have saved the Postal Service about $. million in FY 4 and $.7 million4 in FY 5. In addition, employees at nine of the 5 VMFs did not reconcile commercial vendor shuttling invoices to the fiscal year budgeted amount in SEAM or to any documented shuttling service request. Managers at only two of these nine VMFs confirmed that shuttling services they received matched their documented shuttling service requests. Two other VMFs did not use any commercial vendors for shuttling and, therefore, did not require reconciliations. Finally, management understated shuttling costs because labor hours were not accurately put into SEAM for any of the 5 VMFs in FY 4 and for VMFs in FY 5. These conditions occurred because Postal Service policies5 lack specific procedures for managing and overseeing shuttling services, such as vendor selection. This handbook specifies which account codes should not be used for vehicle shuttling. In addition, Handbook PO-7 only provides guidance on entering data and reconciling costs for commercial vendors that have a national or local VMRA. These conditions occurred because Postal Service policies lack specific procedures for managing and overseeing shuttling services, such as vendor selection. Lack of standardized shuttling procedures for vendor selection, reconciliations, and shuttling rates and fees could result in the Postal Service not receiving the most cost-effective service and paying for questionable shuttling services. In addition, inaccurate reporting in SEAM gives limited assurance that managers can rely on shuttling cost data to make operational decisions. Reducing commercial labor workhours could save the Postal Service about $. million in FY 6 and $.7 million in 7. Vehicle Shuttling Rates and Fees Our audit determined that 7 VMF managers did not perform cost analyses to obtain the most cost-effective shuttling rates because there was no cost analysis requirement. Our analysis showed that VMF managers6 paid commercial vendors anywhere from $5 to $5 per hour, plus various mileage and hookup fees, for shuttling services (see Appendix B). When cost analyses are not required, inconsistent fees among VMFs could result in overpayments for services going unnoticed Report Number DR-AR-6-4 Differences are due to rounding; the total amount equals $4.9 million. Handbook PO-7, Fleet Management. VMFs in Puerto Rico paid a fixed shuttling rate for all local vendors because rates are established by the Puerto Rico Public Service Commission. This is an independent regulatory body whose mission is to ensure safe, reliable, quality utility service is provided at a fair and reasonable cost. 6

8 We found of the 5 VMFs used local commercial vendors for shuttling services, one used a vendor under the national VMRA, and two7 did not use any commercial vendors for shuttling service. Of the 5 VMFs, two paid rates set by the local utility commission and another used PSEs. Shuttling costs for the VMF which used the national VMRA quadrupled from $45,89 in FY 4 to $,57,759 in FY 5 (see Appendix C). We also found that a VMF manager agreed to a dedicated service arrangement for shuttling which cost the Postal Service up to $5 per hour when the national contract rate was $5.57 per hour. The vendor parked at the VMF waiting for service requests and was paid for hours of service per day. This vendor was also paid a higher rate for using three- and four-vehicle carriers when these carriers were not needed. At the same VMF, vehicles were shuttled up to 5 times in a 9-month period with no documented maintenance or repair service. Finally, under the dedicated service arrangement we found that: The vendor did not always submit monthly invoices and activity reports. Charges were submitted up to months after the service date. Activity reports did not always contain vehicle numbers or pick-up and drop-off times. There was no evidence that delivery receipts were provided with each vehicle pickup and delivery. A comparison of five monthly activity reports to the VMF shuttle request logs found 87 percent of the vehicles the vendor billed to the VMF had no supporting documentation to confirm shuttle service requested. The vendor did not always show up to provide service or arrived late. When a VMF manager uses the VMRA contract, there is a requirement to submit monthly invoices and activity reports in a timely manner. The reports should contain valid vehicle numbers, vehicle pick-up and drop-off times, and delivery receipts for each shuttle service provided. In FYs 4 and 5, commercial labor accounted for 87 and 8 percent, respectively, of total shuttling labor costs in the Northeast Region. The 5 VMFs we reviewed used,676 in combined commercial workhours costing $9.7 million for FYs 4 and 5. Using internal resources to better manage commercial shuttling workhours would have saved the Postal Service about $. million in FY 4 and $.7 million in FY 5. Postal Service management must notify the local union that it is considering contracting out shuttling services;8 however, it can reduce outsourced commercial labor shuttling costs by using internal resources9 without any union ramifications. In FY 5, one VMF reduced shuttling costs by adding two postal support employees (PSE) for shuttling services that provided resources to perform other duties generally assigned to mechanics. The Postal Service can add up to a maximum of 4 extra PSEs at the 5 VMFs in the Northeast Region (see Appendix D). When the Postal Service uses VMF resources, such as postal employees and wreckers or trailers, for shuttling services; it can better monitor and control costs. By reducing commercial labor workhours, the Postal Service could potentially save about $. million in FY 6 and $.7 million in FY 7, based on FYs 4 and 5 (see Table ) Report Number DR-AR-6-4 Stamford and Western Nassau VMFs used in-house VMF labor for shuttling. Handbook EL-9, Agreement between United States Postal Service and American Postal Workers Union, AFL-CIO -5, Article. Internal resources such as postal support employees (PSE). The Postal Service created the PSE category in to provide flexibility with temporary non-career employees. Handbook EL-9, Article 7, Section.B.6. There were 6 wreckers or transport trailers assigned to 9 of the 5 VMFs we reviewed. Savings based on the most conservative analysis of reducing only 5 percent of the commercial vendor shuttling workhours, since commercial shuttling is the only option for remote locations. We also considered Article 7 guidelines during our review. 7

9 Table. VMF Commercial Shuttling Workhour and Cost Reductions FY 4 Name Albany Actual Hours $47,9,65. 5,.5 $,98 $79, , ,789 48,7 Brockton 5,77.5,68.7 9,85 5,66.,8. 9,76 8,48 Buffalo 5,7.,55.6 9,76 4,79.,9.5 9,87,59 Edison , ,7 46, Elmira Aux-Of Buffalo , ,574,448 Fall River,479.8,9.9 8,95,455.,7.5 77,4 6,85 Framingham, ,44, ,47 5,887 Hackensack , ,,748,5.,5. 49,46,559.,78. 78,88 58, ,75,69 New Haven,4.5,7.7,496, ,547 79,44 Newark, ,84, ,87 48,55 Paterson Ponce Aux-Of San Juan Portland, Me, ,9,6.,5. 8,649 6,857 Rochester,47.,.6 5,89,45.,7.5,8 47,64 San Juan Stamford.... Syracuse,865.8,9.9 5,,98., ,6, , , ,88, ,56 87,79,4.5,6.,576 4,595. 7, ,887,9,46...., ,88, ,6,5 5,6. 5,9. $,6,8 6,56.,8. $,74,694 $4,86,56 Kearny Cost Reduction 6,5. Binghamton Aux-Of Albany Hour Reduction Total Possible Commercial Hour Cost Labor Costs Reduction Reduction Reduction,.5 Hartford Utica Aux-Of Albany Waterbury Westchester Western Nassau Worcester Total Actual Hours FY 5 Source: U.S. Postal Service Office of Inspector General (OIG) analysis of VMF shuttle rates and commercial labor costs from SEAM for FYs 4 and 5. We based cost reductions on an estimated average hourly shuttle rate (varied by site) multiplied by the hour reduction. Column totals may vary slightly due to rounding differences. Report Number DR-AR-6-4 8

10 Reconciliations Employees at nine of the 5 VMFs we reviewed did not always reconcile commercial vendor shuttling invoices to the fiscal year budgeted amount in SEAM or to any documented shuttling service request at the VMF or vehicle post office (VPO). Only two of these nine VMFs confirmed that shuttling services they received matched those they requested. Two other VMFs did not use any commercial vendors for shuttling and, therefore, were not required to perform any reconciliation. Reconciliations in SEAM only compare costs entered from the invoice to the amount paid. Reconciliations in SEAM only compare costs entered from the invoice to the amount paid. There is no policy that requires VMFs to reconcile shuttle services rendered (from the invoice) to those requested by the VMF or VPO. Some VMF employees used inhouse manual sheets or logs to track shuttle requests, but not to reconcile invoices. Solution for Enterprise Asset Management Input Labor costs for VMF and commercial vendor shuttling time were understated in SEAM because the 5 VMFs did not always use the correct account code (AC) and VPOs did not always send commercial shuttling invoices to the VMF to put into SEAM. According to Postal Service guidelines,4 AC 8 (Shuttle Time) reflects labor costs for shuttling vehicles for scheduled maintenance and repair purposes only. Employees should not use AC 8 for road calls, accidents, vandalism, and other purposes noted in blue (see Table ). Table. SEAM ACs AC Description Scheduled Maintenance Road Calls 4 Unscheduled Repairs 5 Accident Repairs 8 Shuttle Time 9 Vandalism Fleet Servicing 4 Maintenance and Repair Chargeable to Others 9 Maintenance and Repair of Postal-Owned Equipment Source: Handbook PO-7. Shuttle times used for scheduled maintenance (AC ), unscheduled repairs (AC 4), and fleet servicing (AC ) were entered separately in SEAM, but without using AC 8. According to Handbook PO-7, VMF managers should review maintenance records for accuracy before approving them for their facility. The Postal Service relies on SEAM to manage shuttling services and costs. VPOs did not always send invoices for shuttling service to the VMFs for input into SEAM, resulting in unreported costs in AC 8. The VPOs usually pay for shuttling services with a Voyager Fleet credit card and process them through the efleet Card System, a web-based application in the Fuel Asset Management System (FAMS). VMFs use SEAM to track shuttling labor and towing 4 Handbook PO-7. Report Number DR-AR-6-4 9

11 costs; however, shuttling costs from FAMS are not captured in SEAM unless the invoices are sent to the VMFs for input. Because coding of shuttling service was inaccurate, $.6 million in shuttling costs were not reported in SEAM for the 5 VMFs in the Northeast Region. These conditions occurred due to the lack of Postal Service policies and inadequate oversight of shuttling services at VMFs. Specifically, there is no: Requirement for VMFs to perform cost analysis when selecting shuttling vendors. Policy requiring the reconciliation of vendors invoices to documented VMF or VPO shuttle requests. Policy for VPOs to send shuttle invoices to VMFs to put into SEAM. Requirement that management evaluate whether costs under the VMRA are reasonable. Management assurance that vendors adhere to the national VMRA contract. Oversight to ensure that employees enter consistent and accurate shuttling account codes and costs into SEAM.5 Other Matters During our site visits, we found unsecured new vehicle parts outside a VMF. We estimated engines and three transmissions outside the facility had a value of $,87. Exposure to the elements can damage or destroy assets and they are also subject to theft (see Figure ). Figure. Unsecured Vehicle Parts Source: OIG photograph taken October, 5. Corrective Action Taken VMF managers moved the unsecured vehicle parts inside and secured them nightly when the facility closed; therefore, we did not make a recommendation on this issue. 5 This occurred at all 5 VMFs we reviewed. Report Number DR-AR-6-4

12 . Develop and implement policies and procedures for managing and overseeing shuttling services to include: performing cost analysis for internal and commercial shuttling services, reconciling invoices to shuttle service requests, directing vehicle post offices to submit shuttle invoices to vehicle maintenance facilities, and reassessing national Vehicle Maintenance Repair Agreement vendor guidelines.. Ensure shuttling costs are accurately recorded in the Solution for Enterprise Asset Management system. Management s Comments Management disagreed with the report s analysis, findings, and recommendations. In response to the audit, management stated that: The savings analysis relies on violating the American Postal Workers Union (APWU) National Labor Agreement (NLA) by using PSEs from Function and 4 to perform Function work, as well as exceeding the percent cap of PSEs in the motor vehicle craft. Furthermore, it is extremely unlikely that the Postal Service could realize a 5 percent reduction in shuttling contract work even if the Vehicle Maintenance group has a separate cap. The OIG assumes PSEs would have the necessary skills and qualifications for loading and towing vehicles with heavy equipment. Comparing a PSE hourly rate to a fully loaded commercial labor rate charged for performing towing service is an unrealistic comparison. The assumption that the Postal Service could save $.7 million based on reducing commercial workhours by 5 percent is completely arbitrary and without merit. The audit implies that the commercial hourly rate has no basis and can be replaced with the hourly rate of a PSE employee. The hourly rate is based on a professional driver with a commercial driver s license hauling up to three vehicles an hour. The audit fails to recognize the driver s license requirement, cost of equipment, and wear and tear on the vehicle being driven. We recommend the vice president, Delivery Operations, direct Northeast Region fleet management to:. Reduce commercial shuttling costs by using additional internal resources for shuttling services where available and necessary. The report claims there is no requirement to evaluate the financial impact for contracting out work while there clearly is an obligation to do so under Article of the NLA and VMB -, Vehicle Maintenance Repair Agreement for Shuttling Service. The OIG also claims that shuttle time cannot be determined in SEAM, which provides redundant methods of identifying shuttle time. Only 7 percent of the five PSEs workhours are attributed to shuttling. Based on the percent district cap of PSEs, only additional PSEs could be hired at these sites, as opposed to the 4 that the OIG claims. If management could hire PSEs to the cap with an ambitious rate of 5 percent of the hours being contributed to shuttling the OIG audit savings of,8 hours would be reduced by about half. Report Number DR-AR-6-4

13 Management takes exception to the audit making a specific reference to a VMF manager who Fleet Management previously referred to the OIG investigation team for improper contractor management. Most frustrating is that management coordinated with the OIG s Office of Investigations (OI) for nearly years to address this issue; however, now, the OIG is criticizing management s failure to correct the problem. In response to recommendation, management disagreed with using additional internal resources to reduce commercial shuttling costs due to a hiring cap. However, they will use internal resources that do not violate the national agreement. In response to recommendation, management disagreed that they need to develop and implement policies and procedures for managing and overseeing shuttling services, based on two cited resources. Management stated that they will provide greater oversight under their new Fleet Management structure. In response to recommendation, management agreed to reinforce the accurate recording of shuttling costs in SEAM. See Appendix G for management s comments in their entirety. Evaluation of Management s Comments The OIG does not consider management s comments responsive to the recommendations in the report. The OIG s savings analysis does not violate the percent PSE cap in the labor agreement. We used staffing information provided by management to calculate the maximum number of PSEs, based on percent of the total number of career motor vehicle craft employees in each district, less any PSEs on the roster. This report does not mention using PSEs from Function and 4 to perform work in Function. Commercial labor accounted for 87 and 8 percent of total shuttling labor costs in the Northeast Region during FYs 4 and 5, respectively. Reducing shuttling labor by 5 percent would still leave contractors to perform over percent of shuttling. When vehicles need to be shuttled, using commercial labor should not be automatic when the Postal Service could use their trailers and wreckers or seek alternative internal solutions through training, certification, or transfers. PSE employees must have a valid driver s license, safe driving record, and at least years of unsupervised experience driving passenger cars or larger. There is no commercial driver s license requirement for driving vehicles for scheduled maintenance. The OIG based its savings calculation on a conservative analysis of reducing only 5 percent of commercial vendor shuttling workhours, since commercial shuttling is the only option for remote locations. As the Postal Service looks for ways to become a more lean and efficient organization, VMFs should seek to do the same by reducing unreasonable/unnecessary shuttling expenses. If the VMF cannot shuttle a particular type of vehicle for a specific reason, then establishing controls to perform a cost benefit analysis could ensure efficient use of funds. We based our cost reductions on an estimated average hourly shuttle rate by site, since not all vehicle shuttles consist of multiple vehicles. Article of the NLA requires union notification when considering contracting out services that will have a significant impact on bargaining work; however, commercial shuttling is not part of a VMF mechanic s bargaining work. Contracted shuttling can be brought in-house under Article 7 of the NLA, which allows reduction of outsourced commercial labor without union ramifications. VMB - also states that the VMF manager s decision must comply with NLA Article. Report Number DR-AR-6-4

14 We do not claim that SEAM cannot determine shuttle time, merely that labor costs for VMF and commercial vendor shuttling time were understated in SEAM. The audit disclosed that VMFs did not always use the correct account code and VPOs did not always send their commercial shuttling invoices to the VMF to put into SEAM. Our analysis identified a maximum of 4 PSEs for the 5 VMFs reviewed. We based this on percent of the total number of career motor vehicle craft employees in each district, minus any PSEs on the roster. SEAM did not accurately reflect all hours used for shuttling; therefore 7 percent of the PSEs workhours may be under-represented. We based the,8 of workhour savings on reducing 5 percent of all the commercial labor recorded in AC 8 (shuttling) in SEAM for FY 5. This is a conservative estimate, considering the Postal Service did not report an additional,88 workhours in FY 5 for shuttling services in AC 8. PSEs are only guaranteed hours of work and can provide flexibility with scheduling and operations management. We followed OIG policy requiring notification to OI at the beginning of the audit and coordinated with OI throughout the audit, as appropriate. In addition, OI has not been investigating the matter highlighted in the audit for years and we are not aware of any communication between OI and the Postal Service that would prevent management from taking action to address the issue. Management disagreed with recommendation to reduce commercial shuttling costs by using additional internal resources. We considered Article 7 of the NLA, which allows use of additional PSE employees when contracted work is brought in-house. One VMF has been successfully using PSE Garageman staff for shuttling services. In calculating the maximum number of PSEs allowed by district, we used complement data provided by management for our analysis. We used a conservative estimate of potential savings on a program with limited oversight. Additionally, our audit uncovered an issue that could lead to fraud and cause the Postal Service to continue to expense funds unnecessarily. Management also disagreed with recommendation to develop and implement policies and procedures for managing and overseeing shuttling services. As stated earlier, we reviewed NLA Article and VMB-- guidelines which pertain to contracted commercial vendors. Management stated that their new Fleet Management Group would ensure compliance and oversight for local VMFs and the most cost effective use of contractors. Management s action should resolve the issue identified in the report. and require OIG concurrence before closure. Consequently, the OIG requests written confirmation when corrective actions are completed. We view the disagreements on the recommendations as unresolved and do not plan to pursue them through the formal audit resolution process. Regarding recommendation, management s actions should resolve the issue identified in the report. We consider recommendation closed with the issuance of this report. Report Number DR-AR-6-4

15 to the right to navigate to the section content. Appendix A: Additional Information...5 Background...5 Objective, Scope, and Methodology...5 Prior Audit Coverage...6 Appendix B: Shuttling/Towing Rates and Fees...7 Appendix C: Shuttling Labor Costs for 5 Vehicle Maintenance Facilities...8 Appendix D: Vehicle Maintenance Facility Staffing...9 Appendix E: Vehicle Maintenance Facility Vehicle Count... Appendix F: Flowchart of Vehicle Shuttling Process... Appendix G: Management s Comments... Click on the appendix title Report Number DR-AR-6-4 4

16 Appendix A: Additional Information Background Shuttling is the scheduled movement of postal-owned vehicles from a Post Office to a VMF or commercial vendor for maintenance or repair. VMF managers have the discretion of using Postal Service employees, vendors associated with the national VMRA, or local vendors. In FY 4, the 5 VMFs had 6 full-time employees and one PSE. During FY 5, staffing increased to 78 full-time employees and five PSEs (see Appendix D). The Postal Service uses commercial labor to shuttle drivable vehicles for routine scheduled maintenance or repair; however, some VMFs have wreckers that do not require a commercial driver s license (see Figure ). There were 6 wreckers or transport trailers assigned to 9 of the 5 VMFs we reviewed (see Appendix E). Figure. Postal-Owned Wreckers Used for Shuttling Source: OIG photograph taken November, 5. The Postal Service uses SEAM to track shuttling labor costs. AC 8 captures VMF labor hours assigned to perform shuttle service, along with shuttling services provided by commercial vendors. Regardless of payment type, all labor hours and costs for shuttling postal-owned vehicles for scheduled maintenance and repair should be recorded in SEAM. See Appendix F for a flowchart of the Postal Service s shuttling process. Objective, Scope, and Methodology Our objective was to determine whether the Postal Service was cost effectively shuttling postal-owned vehicles in the Northeast Region. We judgmentally selected 5 of the 8 VMFs in the Northeast Region for review. To accomplish our objective, we: Reviewed and evaluated criteria and procedures related to vehicle shuttling. Met with the Postal Service Headquarters manager, Fleet Operations, and senior fleet operations specialist to gain a better understanding of the vehicle shuttling process. Report Number DR-AR-6-4 5

17 Consulted with the OIG Operations research expert to determine the sample size and cost-saving methodology. Obtained, reviewed, and evaluated SEAM data for FYs 4 and FY 5. Analyzed shuttling contracts for national VMRA and local vendors. Conducted site visits at VMFs and interviewed VMF managers at 56 sites about their shuttling process, obtained supporting documentation, and reviewed shuttle invoices. Discussed results of the audit with Postal Service management, including the vice president, Delivery Operations; the manager, Fleet Operations; and the Northeast Region fleet manager. We assessed the reliability of computer-generated data by reviewing source documents and interviewing agency officials knowledgeable about the data. We relied on existing Postal Service criteria and documentation available on the Postal Service intranet and shuttling agreements provided by the Postal Service. We determined that the data were sufficiently reliable for the purposes of this report. We conducted this performance audit from September 5 through May 6, in accordance with generally accepted government auditing standards and included such tests of internal controls as we considered necessary under the circumstances. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. We discussed our observations and conclusions with management on March 8, 6, and included their comments where appropriate. Prior Audit Coverage We did not identify any prior audits or reviews related to the objective of this audit. 6 We contacted management at the Puerto Rico VMFs by telephone. Report Number DR-AR-6-4 6

18 Appendix B: Shuttling/Towing Rates and Fees Selected VMFs ALBANY BINGHAMTON AUX-OF ALBANY Hourly Rate Hook-up Fee $9 $8 flat rate for first 5 miles, then $. per mile. BUFFALO EDISON FRAMINGHAM HARTFORD $.75 per mile $ - $ $.5 per mile $5 - $5 $.5 to $.75 per mile $5 $.5 per mile Most shuttling costs recorded in wrong account code. $78 $75 - $5 $4 - $8 $4 NEW HAVEN $6 - $5 $5 NEWARK $65 - $ PATERSON $6 - $75 KEARNY $45 $7 FALL RIVER HACKENSACK PONCE AUX-OF SAN JUAN Shuttling used only for heavy duty vehicles and spotters. $5. per mile ROCHESTER $ $. per mile $ - $ flat rate for first 5 miles $.6 - $.74 per mile over 5 miles, plus $ additional for multiple stops, plus % fuel surcharge. $5 - $5 flat rate plus $.5 - $ per mile plus other fees for other tows. $. per mile Government sets rate. $75 - $5 WATERBURY $6 - $ $4 - $88 $ to $5 per mile WESTCHESTER $75 - $5 Plus.5 % Admin. Fee for National Contractor. WESTERN NASSAU WORCESTER Government sets rate. No commercial labor used. $8 UTICA AUX-OF ALBANY Rates change based on the type of vehicle and vendor. $ per mile over miles $4. per mile after 5 miles $ SAN JUAN STAMFORD $.5 to $4.5 per mile $.75 per mile over 5 miles PORTLAND SYRACUSE Comments $75 - $8 BROCKTON ELMIRA AUX-OF BUFFALO Mileage Rate No commercial labor used. $5 $ - $4 $. to $.5 per mile Source: Postal Service VMF managers. Report Number DR-AR-6-4 7

19 FY 4 Selected VMFs ALBANY VMF Labor VMF Labor $6,78 $86,6 $977,45 6,786 7,9 74,696,988 8,46 4,44 456,5 456,5 46,65 486,7 5,75,698,85 4,5 4,569 6,7 96,696 45,54 45, ,8 6,976,84 4,84 6,68 4,54,96 45,98 FALL RIVER 55,486,74 4,96 99,48 4,87 FRAMINGHAM 457 4,888 4,45,69,67 4,9 HACKENSACK,769, ,778 6,448 6,66 54,44 85,5 78,65 6,856 9,58 KEARNY 79, ,4 9,4 5,5 4,566 NEW HAVEN 44,85,84 56,89 5,456 8,86 7,9 NEWARK,57,596 4,95 4, 7,776,798 PATERSON 8,946 8,946 6,56,98 8, PORTLAND,54 7,74 7,84,65 6, 8,66 ROCHESTER 4,9 6,5 65,96,58 8,5 9,5 SAN JUAN 6,8 88 6,6 4,46 4,46 STAMFORD 67,647 67,647 8,95 8,95 SYRACUSE 6 59,58 59,679,84 7, 94,67 5,79 7,55 6,4 57, ,865,7 76,56 88,65 8,54 4,67 69,86 WESTCHESTER ,4 45,89 4,45,4,4,57,759 WESTERN NASSAU ,845 7,845 7,99 46,47 54,9,466 44,4 66,78 $85,976 $4,98,5 $5,796, $,5,888 $6,57,6 $7,94,894 BUFFALO EDISON ELMIRA AUX-OF BUFFALO HARTFORD Total Labor Commercial Labor Total Labor $,4,67 BROCKTON PONCE AUX-OF SAN JUAN Commercial Labor $,,75 UTICA AUX-OF ALBANY WATERBURY WORCESTER Total FY 5 $7,5 BINGHAMTON AUX-OF ALBANY Appendix C: Shuttling Labor Costs for 5 Vehicle Maintenance Facilities Source: SEAM Vehicle Maintenance Cost Report in Dollars. Report Number DR-AR-6-4 8

20 Appendix D: Vehicle Maintenance Facility Staffing District Total Mechanic Garagemen PSE Total Additional PSEs Allowed7 4 PONCE AUX-OF SAN JUAN 4 4 WORCESTER 4 4 FRAMINGHAM BROCKTON NORTHERN PORTLAND NEW ENGLAND FALL RIVER HARTFORD 4 NEW HAVEN 8 WATERBURY STAMFORD 4 4 NEWARK 5 7 KEARNY PATERSON 9 9 HACKENSACK EDISON 5 6 WESTCHESTER WESTCHESTER LONG ISLAND WESTERN NASSAU 7 8 ALBANY 4 BINGHAMTON AUX-OF ALBANY UTICA AUX-OF ALBANY SYRACUSE BUFFALO ELMIRA AUX-OF BUFFALO ROCHESTER CONNECTICUT VALLEY Mechanic Garagemen PSE FY 6 GREATER BOSTON NORTHERN NJ Selected VMFs FY 5 SAN JUAN CARIBBEAN FY 4 ALBANY WESTERN NEW YORK Total 7 Source: SEAM VMF Employee Roster report. 7 PSEs were calculated using March 6 staffing information provided by postal management. The maximum number of PSEs was based on percent of the total number of career motor vehicle craft employees within each district, minus any PSEs on the roster. All 8 VMFs in the Northeast Region were included in the analysis; however, only PSEs applicable to the 5 VMFs, included in the audit, are noted. Report Number DR-AR-6-4 9

21 Appendix E: Vehicle Maintenance Facility Vehicle Count FY 4 Selected VMFs Wrecker/ Transport Trailer Other 98,9 BINGHAMTON AUX-OF ALBANY 6 65 BROCKTON EDISON Wrecker/ Transport Trailer BUFFALO,45,6,59,5 ELMIRA AUX-OF BUFFALO 84 9 FALL RIVER FRAMINGHAM HACKENSACK HARTFORD,, KEARNY 69 5 NEW HAVEN NEWARK,87,88 PATERSON PONCE AUX-OF SAN JUAN Other 8 ALBANY 9 6 PORTLAND ROCHESTER SAN JUAN STAMFORD SYRACUSE UTICA AUX-OF ALBANY 4 4 WATERBURY WESTCHESTER,66,667 WESTERN NASSAU WORCESTER Total FY , ,857 Source: SEAM VMF Vehicle Count report.8 8 Non-shuttling postal vehicles assigned to the VMF. Report Number DR-AR-6-4

22 V ehic le S huttling R equir ement A va ila bility of tr a ined V MF S ta ff a nd equipment Appendix F: Flowchart of Vehicle Shuttling Process V ehic le loc a tion, dis ta nc e, a nd number of vehic les to be moved V MF ma na ger dec is ion to us e inter na l or exter na l r es our c es N a tiona l C ontr a c t V MR A L oc a l V endor U s e of mec ha nic, ga r a ge ma n or P S E VPO R eques t C r ea te Wor k O r der in S E AM Ma na ger S uper vis or R eview Wor k O r der C los ed S elec tion of c ommer c ia l vendor V MF R eques ts S huttle L oc a l V endor s er vic e V MF r eques t s er vic e thr ough N a tiona l C ontr a c t C ommer c ia l Wor k or der c r ea ted P a yment to vendor by VPO Invoic e of s huttle s er vic e s ent to V MF by VPO C ommer c ia l Wor k or der c r ea ted Ma na ger S uper vis or R eview a nd A ppr ova l Wor k O r der C los ed Monthly a c tivity s heet of invoic es s ent to L oc a l V endor s huttles vehic le Invoic e to V MF V MF enter s invoic e infor ma tion into S E A M Ma na ger S uper vis or R eview a nd A ppr ova l Wor k O r der C los ed V MF Ma na ger S a n Ma teo V MF enter s invoic e infor ma tion into S E A M P a yment for N a tiona l C ontr a c t Ma na ger S uper vis or R eview a nd A ppr ova l Wor k O r der C los ed Source: OIG analysis. Report Number DR-AR-6-4

23 Appendix G: Management s Comments Report Number DR-AR-6-4

24 Report Number DR-AR-6-4

25 Report Number DR-AR-6-4 4

26 Contact us via our Hotline and FOIA forms. Follow us on social networks. Stay informed. 75 North Lynn Street Arlington, VA 9- (7) 48- Report Number DR-AR-6-4 5